Keep your money inaccessible

Okay, on first glance that seems like terrible advice. You need your money. And you certainly don’t want to be caught short when you’re shopping for groceries or need gas.

That said, I’m happy to report that keeping a certain amount of money inaccessible is doing wonders for our savings.

Automating your finances has been lauded by PF bloggers for ages. It’s a no-brainer. But it’s something I’ve never really felt comfortable doing. The only automated part of our finances is the amount subtracted each week toward my IRA.

With the ING account, though, things have gotten a lot easier. I still don’t automate the withdrawals. My check is mailed to me, so it can come anywhere from the 8th to the 12th — and then we still have to get it into the bank.

Once it’s in the bank, though, I cruise on over to ING and transfer in $300: $100 for savings, $100 for Medicare premiums and $100 to the relative who loaned us money.

It’s not a lot, I know. Obviously, I want to put more in savings as things stabilize. But the point is that I take it out before I start allocating monthly expenses, credit card payments or anything else. It’s automatic, and it’s safely tucked away.

Similarly, I recently had an “Aha” moment with PayPal payments.

I always transfer them into our main checking account. Before I can get much done with those funds, they get sucked up by the latest emergency. If I’m lucky, half of the amount goes to debt or savings or whatever.

I linked PayPal over to my ING account. Now I can transfer the funds directly to our safe, online account where they won’t be touched.

That’ll add up big time for my monthly Mr. Rebates payouts, when I get advertisers or when we sell eBay items.

In fact, we recently sold some cards on eBay. After postage and fees, we made about $160. There were some other funds in the account, and so I sent a whopping $255 to ING, secure in the knowledge that every cent will go into our savings account.

Comments

When I was in college, a friend of mine got a summer job that was paying $17/hour – amazing amounts of money to us poor college students. After a month or so, my friend bemoaned the fact that she couldn't seem to stop herself from spending too much on day to day things – when she'd go to the ATM, to take money out, the fact that she had $2500 in the account, made her "feel rich" so she'd take $80 out instead of $20 – and blow it on coffees, lunches, etc.

I suggested that she open a second bank account and *not* link it to her ATM card – and deposit her paycheques into that account – then withdraw what she was allowed to spend and only put that into her chequing/ATM account – or some equivalent, so that it was *HARD* to get to the money.

She opened an account at a completely different bank <g> and managed to save thousands for school, rather than frittering it all away.

You have to trick your brain – whatever works!

I have my 401k come off the top of my paychecks – I don't even think about it, but at the end of the year, that's $14k in my savings account. Because I get direct deposit, I am also able to use my online banking accounts to pull money out automatically at the start and middle of the month, to put into various accounts for saving for medical, taxes, vacations, etc. I pay the mortgage, utilities and HOA manually, and what's left is all I'm allowed to spend on day to day things.

sorry, opposite philosophy here. i tried the automated route years ago when it was first coming out. the only experiences i've had with it are bad ones from daily use to emergency access. gone back to the tried and true envelope system and paper accounts. if i can't control my money fine, i'll suffer. but suffering because someone else controls my money and is always changing rules "with or without notice" is not in my book of acceptable memes.

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